A Massachusetts Appeals Court has rejected an attempt by a mortgage assignee using the doctrine of equitable subrogation to impose on a surviving spouse an obligation to pay the balance of deceased husband’s note that was used to refinance their home mortgage loan.

In Wells Fargo Bank, N.A., v. Comeau., No. 16-P-335 (Mass. App. Ct. Nov. 15, 2017), a husband and wife owned a home as tenants by the entirety. They had a mortgage on the property on which they both were personally liable. In 2003, the husband borrowed money from a local bank to refinance the mortgage and pledged the home as collateral. The wife signed the mortgage, but not the note, so she had no liability on the loan. When the husband died, the assignee of the loan sued the wife claiming its mortgage should be equitably subrogated to the position of the 2003 mortgage – the one signed by the husband and wife. The Superior Court rejected the assignee’s claim.

The court found the assignee’s theory to be fundamentally at odds with the law of equitable subrogation as established by Massachusetts law. It listed the five factors courts should consider in deciding if equitable subrogation applies but acknowledged that the question is governed chiefly by equitable considerations.

Those considerations strongly weigh against the mortgage assignee. The originating lender had no expectation when it refinanced the loan that the wife would be liable for the debt. The ultimate purpose of equitable subrogation is to prevent unjust enrichment, and while the wife may have been enriched, “she was not unjustly enriched.” And absent any wrongful or misleading conduct or mistake by a third party, the assignee should not “now obtain exactly what its predecessor-in-interest . . . chose to forego,” namely, a lien on wife’s interest in the property.